Riot said profits fell as it scaled back its Texas operations amid pent-up demand for electricity.
Bitcoin mining heavy Riot Blockchain (RIOT) disappointed average analyst expectations in the third quarter.
The miner posted a profit of $46.3 million, lower than the average estimate of $56.3 million, resulting in a net loss of $0.24, compared to the average net earnings of $1 compiled by FactSet.
Riot’s revenue was lower than the previous quarter $72.9 million, and lower than the same period last year, when the company reported $64.8 million. The miners have caused a drop in bitcoin prices and reduced activity in response to rising energy demand in Texas, according to a press release on Monday.
RIOT’s stock price fell about 1% in after-hours trading on the Nasdaq, following the release of its earnings report.
However, miners’ cash reserves were unchanged compared to the previous quarter, although other major miners said they were close to bankruptcy. Riot had $255 million in cash and 6,766 BTC at the end of the third quarter, compared to $270.5 million in cash and 6,653 BTC at the end of Q2.
Riot is one of many miners participating in the curtailment process in Texas, which turns off their machines when demand rises on the power grid in exchange for credits that can be used later with the local grid operator. Riot earned $13.1 million in those credits during the quarter, $9.5 million of which came in July. Bitcoin production for the month dropped by 28% due to participating in this demand response program.
Miners’ hosting revenue, which means the fees collected to provide infrastructure for other companies’ machines, also decreased in the quarter from $8.4 million to $9.8 million.
Riot’s mining margins have dropped significantly, similar to other miners. In the second quarter of this year, the mining revenue exceeding the cost of revenue for the segment was $28.2 million, or 61% of the revenue from mining. In the third quarter, $7.4 million, about 33% of the total mining revenue.